Advice From The Field: Analyzing local demographics

Local and regional demographics play an important role in determining the feasibility of starting a small business — or of adding a new product or service to an existing business.

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By Charlene Maurer Finerty

recordonline.com

By Charlene Maurer Finerty

Posted Jan. 14, 2013 at 2:00 AM

By Charlene Maurer Finerty

Posted Jan. 14, 2013 at 2:00 AM

» Social News

Local and regional demographics play an important role in determining the feasibility of starting a small business — or of adding a new product or service to an existing business.

Statistics from Marist College published last month in this newspaper indicate that, within a half hour's drive north or south of my location, total 2011 personal income averages by county varied from $20,969 to $50,666.

Statistics can lead or be misleading. We may initially be averse to doing business in the county with the lowest income in the region, until we learn that it is ranked 25th out of 62 counties in New York state.

Some products and services serve a broad general audience. Others can appeal to different segments of the public, perhaps by varying the price point or even the packaging. Color, shape, sheen and thickness of packaging all influence the buyer. Brown paper bags have gone from the poor man's suitcase, to economical school book covers, to luxury. Small high-quality brown bags now hold premium coffee and other perceived-to-be luxury items. Basic converts to luxury depending on presentation.

Anyway, there is no reason for purveyors to shun the lower-valued market. It represents a tremendous number of people who all have to eat, buy clothes, seek medical care, stay warm and get from point A to point B.

Demographics at census.gov can inform market research. The process begins with a simple question: Who will buy your product or service?

Compare the targeted geographic area to the state or the national average. What do you want to see? Higher-than-average number of young women? Higher-than-average kindergarten kids? Lower-than-average retired folks? How many owner-occupied homes? You get the idea.

Weather and income also affect decisions. Boca Raton, Fla., stores do not sell snow blowers to homeowners. Reason No. 1: It does not snow. Reason No. 2: Wealthy people hire contractors to perform that service.

Not all product and service decisions are that clear-cut. Corporations and consultants specialize in testing markets to determine if products will sell. Red, blue, yellow, 4 ounces, 10 ounces? It's not unlike handicapping political races, where statisticians measure geographic areas for their mix of men and women, economic status and age ranges, etc., to predict elections.

It is up to the entrepreneur to define and find the target audience and perform.

Charlene Maurer Finerty, owner of Plans and Profits, LLC, edits, teaches and writes custom business plans. See www.PlansAndProfits.com. She also offers a Write-Your-Own-Business Plan class on DVD at BusinessPlanWritingClass.com. Contact finerty@aol.com any time or 343-1515 from 9 a.m.-7 p.m. Her column appears alternating Mondays.